As the regulatory environment is becoming increasingly more complex in the financial industry, it is important to have the proper mechanisms in place to navigate this rocky terrain and manage reporting, which is where Matterhorn Reporting Services comes in. Matterhorn creates and delivers SaaS regulatory reporting solutions primarily to small and medium-size FIs across Europe. Besides software, they also provide consulting services. Their clients include asset managers, private equity institutions, hedge funds, banks and fund administrators.
“We see ourselves as a regtech company,” says Geert Hids, founding partner of the organisation. Hids, along with Olaf van Halm and Tijs Huisman began Matterhorn in 2014. They started the business because it was in line with their backgrounds in compliance and securities processing and because they saw an opportunity to deliver a critical service to institutions. “Reporting obligations can be a burden to companies,” says Hids, particularly since regulations have become stricter after the 2008 economic crisis and are still accumulating.
Having settled in to the regulatory reporting sector, the organisation aims to become a regulatory reporting hub in the coming years.
Regulatory reporting assistance: the market
Matterhorn provides both regulatory compliance software to clients and reporting and compliance services, including handling reporting for their clients. Software, though, accounts for the lion’s share of their business, being the area where they want to grow their business in the future.
“Europe is our primary market,” says Van Halm, “and because of Europe-wide regulations, when we develop software we can deliver it anywhere.” Currently, they have clients from seven European countries. Matterhorn also provides reporting services for non-EU clients, helping them report in all EU-countries where they do business. Hence, as Van Halm notes, “institutions outside the EU that need to report in the EU are also potential clients.”
Regulatory software: MIFID2, AIFMD, PRIIPS
Their software is compatible with an institution’s current systems, and can easily be accessed through a web browser, for example. The software is thoroughly tested with the assistance of regulators before delivery, as was the case with their MIFID2 product, which was tested months in advance of the January 2018 roll out of the directive.
Regarding MIFID2, Matterhorn’s services do not cover the entirety of the directives reporting requirements; rather, they focus on transaction reporting, which is a daily task under the legislation. The roll out of this new set of regulations for Matterhorn’s clients has gone smoothly, says Halm, while Hids notes that the biggest challenges for FIs around the legislation from a transaction reporting perspective involve having the right institutional knowledge to consistently carry out compliance and the considerable time investment required to set up solutions.
Despite MIFID2’s recent roll out, their MIFID2 solution is not their most in-demand product. “Our most popular product is our AIFMD [Alternative Investment Fund Mangers Directive] Annex 4 reporting solution,” Hids reveals, also indicating that they receive a lot of business from alternative investment funds. The EU requires all alternative investment fund managers to report on all the funds under their management in the EU, and under Annex IV, fund managers must report about the fund manager and the fund.
Next to their AIFMD solution, they assist companies in creating and maintaining their PRIIPS KIDs (Packed Retail Investment and Insurance-based products Key Information Documents). These services are in high demand from FIs due to their mandatory reporting nature which creates continuous interest.
“Our competition comes from in-house IT departments at FIs,” Hids indicates, noting that although there are other organisations that provide services and products similar to Matterhorn’s, companies that handle reporting themselves are the bigger competition.
Since regulatory reporting is complex and takes significant amounts of human resources to maintain, Hids advises clients to outsource their regulatory reporting obligations to a specialised company, enabling them to focus on their own core business.
By Elliot Lyons, Research Analyst